The Commercial Clean Vehicle Tax Credit, also known as Internal Revenue Code 45W, is used for both consumer vehicle leases, as well as EVs for businesses and tax-exempt entities like nonprofits, community organizations, churches, schools, and government vehicles like city and county fleets.
Consumer EV Leases
Leases on new electric vehicles may be eligible for a tax credit of up to $7,500 through the manufacturer and the dealer.
How It Works
If you are interested in leasing a new EV and taking advantage of the tax credit, the company that finances the lease (usually an affiliate of the manufacturer) will access this tax credit through the Commercial Clean Vehicle Tax Credit. The finance company will purchase the vehicle as an investment (not for transportation) and lease it to a consumer.
You will need to check with the dealer or manufacturer to make sure this tax credit will be passed on to you in the lease. It could be applied as a down payment on your vehicle, or to buy down the cost of the monthly payments on your lease.
Tip: To have a better idea if the manufacturer of the vehicle you are interested in leasing is passing the tax credit to consumers through leases, check this website. Check often, as these are subject to change. If the manufacturer is passing the tax credit through leases, make sure that the dealership applies the full amount of the credit to the amount you owe, either as a down payment or to buy down your lease payments. You may have to negotiate.
Vehicle Eligibility
Vehicles must meet all of the following requirements:
- The vehicle you lease must be made by a qualified manufacturer.
- The vehicle must be new.
- The vehicle you lease must be propelled by an electric motor of at least 7kWh and be able to charge from an external source of electricity.
- The credit amount is the lower of
30% of the sales price for all-electric vehicles
or
15% of the sales price for plug-in hybrid electric eehicles
or
the incremental cost of the vehicle
(This will be $7,500 with the exception of compact PHEVs)
–This amount is capped at $7,500–
Commercial Electric Vehicle and Fleet Vehicles
Commercial electric vehicles are eligible for a tax credit of up to $7,500 for light-duty vehicles and up to $40,000 for vehicles over 14,000 pounds.
Vehicle Eligibility
- The vehicle must be made by a qualified manufacturer.
- Vehicles under 14,000 pounds must be propelled by an electric motor of at least 7kWh and be able to charge from an external source of electricity.
- Vehicles over 14,000 pounds must be propelled by an electric motor of at least 15kWh and be able to charge from an external source of electricity.
- The credit amount is the lower of
30% of the sales price for all-electric vehicles
or
15% of the sales price for PHEVs
or
the incremental cost of vehicle
–This amount is capped at $7,500 for vehicles under 14,000 pounds/ $40,000 for vehicles over 14,000 pounds–
Other Requirements
- Vehicle must be new.
- Vehicle must not be acquired for resale.
- Each vehicle is only eligible for one tax credit.
- Vehicle must be used for business purposes.
- Dealer must report required information to customer and the IRS at the time of sale.
